Environmental Review2015

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1. Introduction

Asaneducationcompany,wearecommittedtohelpingpeopleofallagestolearn.Wealsohaveadutytoplayourpartinmakingsureeveryonehasahealthyandsustainableplanetinwhichtoprogress.Thereislittlepointinourmission–tohelppeopleprogressintheirlivesthroughlearning–ifthereisnoworldtoprogressinto.Itisnotjusttherightthingtodo;itisthe‘must’thingtodo.Educationandcaringfortheenvironmentarefundamentallyconnected-solookingafterourplanetisfundamentallyimportanttoourlearners.Itisnotjusttherightthingtodo;itisthe‘must’thingtodo.ThisthinkingunderpinswhyPearsonhasalongtrackrecordofinvestingingreeninitiatives.Ourflagshipenvironmentalinitiativeisclimateneutralitybutourcommitmentgoeswidertoembraceaconcerntoprotectthenaturalresourcesonwhichwealldepend.Ourvisionissharedbyothersintheworldofeducationandmanyoftheinstitutionsweserveareenvironmentalleadersbothinthoughtandpractice.Weknowthatourcustomersandlearnersvaluethecommitmentwehavetobeingaresponsibleenvironmentalcitizen.Wereportthehighlightsofourenvironmentalactivitieswithinoursustainabilityreportingbutalsoproducecompanionreportsprovidingadditionaldetailonbothourclimateneutralcommitmentandonpaperpurchasingasourmostmaterialenvironmentalimpactarea.2. OurclimateneutralstrategyIn2006,concernoverclimatechangefirstemergedontothepublicpolicyagenda,risingupthelistofconcernsofinvestorsandwasofinteresttoauthors,employees,studentsandcustomersalike.Pearsonwantedtorespond.Wedecided,weadopted‘climateneutrality’asabig‘hairy’environmentalgoalthatwecouldusetofocustheorganisationonreducingourenvironmentalimpact.Thiscommitmentwasachievedin2009andhasbeenrenewedandrefreshedeveryyearsince.Ourclimateneutralcommitmentcoverscompanyoperationsunderourdirectcontrolsuchasbuildingsandtravel.Thecommitmentexcludessupplychainactivitiessuchasourdigitalsupplychain,paperpurchase,printingordistribution.Ourstrategyisbuiltonthreekeyareas:

1. Measure.Wehaveanestablished,independently-verifiedprocesstomeasureourclimatefootprintrelatingtoourbuildingsandfrombusinesstravel.

2. Reduce.WecuttheGreenhouseGasemissionsrelatingtoourbuildingsandbusinesstravel.Wehaveintroducedenergy-efficientdesignacrossourbuildings,investedinalternativestobusinesstravelsuchasvideoconferencingaswellaspurchaseandgeneraterenewableenergytomeetourglobalelectricityneeds.

3. Offset.Whateveremissionswehavenotbeenabletoreduceoravoidareoffseteachyearby

supportingarangeofforestbasedprojectsthateithersaveorabsorbatonneofcarbonforeachtonnethatweemit.

WeinvolveallpartsofPearsoninachievingourclimateneutralcommitment:

• Facilitiesdepartmentsworkonintroducingenergyefficiencydesignandupgradestogetherwithlookingatrenewableenergyoptionsacrossourmainbuildings.

• InternalcommunicationsteamshavehelpedupdatePlanetPearson,ourdedicatedenvironmentalcollaborationspace.Itisavailableglobally,bringingtogetherinformation,ideasandsignpoststo

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localgreengroupsaswellasencouragingcolleaguestoworktogether.• Ourmarketingteamshavecontinuedtodevelopinnovativepartnershipstoraiseawarenessof

environmentalissuesandboostourreputation.• Editorialcolleagues'commissionbooks,magazineandnewspaperarticlesonawiderangeof

environmentalissuesaswellashostconferencesontheissue.• Ourpurchasingteamshaveworkedwithindustrypartnersandwithsuppliersonassessingand

measuringourtotalcarbonfootprint.• Financecolleaguesofferbudgetaryfundstostimulatenewideasandinnovation.

OurApproachDevelopmentandimplementationofourstrategyisoverseenbytheResponsibleBusinessLeadershipCouncil.Thecouncilischairedbythechiefcorporateaffairsofficerandincludesseniorexecutivesfromacrossthecompany.ProgressisreportedtotheReputationandResponsibilityCommittee,aformalcommitteeoftheBoard.Wehaveanetworkofcountry-specificcommitteessupportedbyaround20eco-committeesatourkeybuildingsthatlookforadditionalopportunitiesforimprovement.Pearsonhasaglobalonlinedatacollectionsysteminplacecoveringutilities,waste,waterandbusinesstravel.Aspartofourduediligence,wecommissionedtwoindependentreviewsofthesystem.ThefirstwascarriedoutbyDeloittein2014andlookedatmanagementandimplementationofthereportingsystemanddataverificationisassessedannuallythroughourassuranceprocesscarriedoutbyCorporateCitizenship.3. Environmentalmanagementandmeasurement

Globally,ouroperationsareaccreditedagainsttheCarbonTrustStandard.Pearsonwasthesecondeverorganisationtobecertifiedagainstthestandardwhichrecognisesleadershipinmeasuring,managingandreducingyear-on-yearcarbonemissions.Pearsonfirstintroduceditsenvironmentalpolicyin1992.OurbusinessesintheUKandAustraliaareaccreditedagainstISO14001,theinternationalenvironmentalmanagementstandard.OtherpartsoftheworldapplyourownenvironmentalmanagementsystembasedonISO14001standards.Thissystemisdescribedinthepoliciesanddownloadssectiononthiswebsite.During2015,wealsoworkedonsecuringaccreditationagainstISO50001,theenergymanagementstandard,aprocesswewillcompletein2016.WehavealsoembracedLEED,thegreenbuildingsstandardintheUnitedStates.WehavesixbuildingscertifiedundertheLEEDstandardwhichtogetheraccountforover740,000squarefeetandwehavesetupateamofcertifiedLEEDassessorswithinthecompany.Thisyear,ourofficesinHobokenbecamethelatesttosecureLEEDcertificationachievingaGoldStandard.4. Climatefootprint:2015

Ourclimatefootprintasattheendof2015was146,368metrictonnesofcarbondioxideequivalent(CO2e);anabsolutereductionof10%over2013and30%lessthan2009,ourbaselineyear.Thismeanswehaveexceededourtargetofreducedourcarbonfootprintby25%.Wearepleasedwiththisperformanceasouroverridinggoalfromadoptingourclimateneutralcommitmentistoreduceourclimatefootprintwherepossible.Ourclimatefootprintreductionwasdrivenbyacontinuedfocusonreducingenergyuseandthedistancewetravelonbusiness.Ourclimatefootprintreductionperformancefortheperiod2013to2015forourthreelargestcountries

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andtherestoftheworldisasfollows:

UK US China ROW

2013 35,236 105,994 18,208 29,254 188,692

2014 21,599 94,348 19,960 26,503 162,410

2015 20,251 79,872 17,655 28,715 146,492

-43% -25% -3% -2% -22%

Wehavemaintainedclimateneutralityfortheperiod2009throughto2015bypurchasinggreenelectricityandthentooffsetanyremainingunavoidableemissions.

Sincewecompletedourcommitmenttobecomeclimateneutralin2009,wehavereducedourabsoluteclimatefootprintbyover65,000ofmetrictonnesofcarbondioxideequivalent.TheeightmostsignificantcountriesforusassourcesofemissionsaretheUS,theUK,China,SouthAfrica,India,Australia,BrazilandCanadawhichtogetheraccountforover95%ofourclimatefootprint.

63,813

88,381

58,112

Climate Neutrality: 2015

GHG reduction for the period 2009 to 2015 Purchase of green electricity Forest based offsets

[PERCENTAGE]

14%

12%

6%

3%

2% 2%

1%

5%

USA UK China South Africa India Brazil Canada Australia Rest of the World

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OurApproachWemeasuregreenhousegasemissions(GHG)relevanttoourbusinessandexpressourtotalasanequivalentinmetrictonnesofcarbondioxide,themaingreenhousegas(GHG).Thisisknownascarbondioxideequivalent(CO2e).

Inourannualreport,wedisclosealloftheemissionsourcesrequiredundertheCompaniesAct2006(StrategicReportandDirectors’Reports)Regulations2013.Thesesourcesfallwithinourconsolidatedfinancialstatement.Wedonothaveresponsibilityforanyemissionsourcesthatarenotincludedinourconsolidatedstatement.AssuranceOurclimatefootprinthasbeenverifiedbythespecialistconsultant,CorporateCitizenship.Theassurancestatementcoversthemethodology,datacollectionandaccuracyofdatareported.ExternalreportingInadditiontothisannualenvironmentalreview,wealsopubliclydiscloseourcarbonmanagementperformancetotheCarbonDisclosureProject(CDP).

5. Reduction

Ourmainmotivationforadoptingourcommitmenttobecomeclimateneutralistoreduceourcarbonfootprint.And,thecommitmenthasworked.Overthelast6years,wehavereducedourglobalclimatefootprintby30%drivenbyastellarperformanceintheUSwherewehavereducedourfootprintbynearlyahalf(46%).Priortoadoptingthecommitment,wereducedourabsolutefootprintannuallybyaround2%perannum,butinthelast6years,ouraverageannualrateofreductionwas7%.

15%

60%

1%

18%

6%

Scope 1 Scope 2

Scope 3 Scope 3 (Business Travel)

Scope 3 (Transmission)

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OurtwoflagshiptargetsrelatetoenergyuseinourbuildingsandasecondcoveringwiderGreenhouseGasemissionscombiningbothbuildingsandtravel:GlobalTargets Baseline

Year2014 2015

ToreduceourGreenhouseGasemissionsby25%bytheendof2015using2009asthebaseyear.

210,306MTCO2e

162,410MTCO2e

146,493MTCO2e

(-30%)Toreduceenergyuseinourbuildingsonanabsolutebasisby15%bytheendof2018using2013asthebaseyear.

285,590MWh

243,614MWh

215,177MWh

(-25%)Bothtargetshavebeenmateriallyexceededdeliveringbothsubstantialcostsavingsaswellasenhancingourreputationonenvironmentalmanagement.Factorsbehindthisperformanceinclude:• Ouracceleratinginvestmentindigitalcontentandtherelatedswitchawayfromphysicalrelated

infrastructuresuchasdistributioncentresisreducingourdirectlycontrolledfootprint.

• Newtechnologywhichisenablingmoreflexibleandgreaterhomeworkingaswellasreducingtheneedforbusinesstravel.

• TheGreenFundasamechanismtostimulateinvestmentandinnovation.Ourportfolioofrenewableenergygenerationprojectsacross5Pearsonbuildingsisanexampleofwhathasbeendelivered.

• Continuingefficienciesimplementedbytheoperationsteamsaswellasstrategiessuchaslimitingbusinesstravel.

Casestudy:LUCID:EnergyMonitoringSystemWefirstintroducedtheLUCIDenergymonitoringsystem(EMS)in2012anditisnowinstalledinbuildingsrepresenting16%ofthetotalUSbuildingsfootprint.TheLucidEMSsystemprovides“realtime”dataonelectricity,waterandgasconsumptionallowingfacilitymanagerstoactivelyreviewtheirusemorecloselyandworkwithlocalutilitiestoreduceusageandavoidadditionalpeakusagecharges.Overthelast3years,utilitycostswerereducedby12%,thepaybackperiodonthe$76kinvestedwasjusttwomonthsandtheprojectdelivered$945Ksavingsoverthreeyears.Nearly8millionkwhofenergyisnowavoidedannuallyatparticipatingsites.

Renewableelectricity:purchaseOurjourneytopurchase100%renewableelectricitystartedin2008andwascompletedin2012.Ourmostsignificantfocusareaforusisourlargestmarket,theUnitedStates.Pearsonhasconsistentlyrankedinthetop50largestpurchasersofelectricityfromrenewablesourcesintheUnitedStatesandhastwicereceivedaGreenPowerLeadershipAwardfromtheUSEnvironmentalProtectionAgencymostrecentlyin2014.

RE100DuringCOP21inParis,PearsonannouncedthatwehadsigneduptoRE100,joiningover50companieshelpingbuildthemarketforrenewableelectricity.OurCFOexplainedourreasonforjoiningas:Thisisthelastgenerationthatcantakemeaningfulactionagainstclimatechange.Onepracticalstepthatbusinesscantakeisthroughthepurchaseofelectricityfromrenewablesources.Pearsonhasactedandwe

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alreadypurchase100%ofourelectricitygloballyinthisway.WearenowpleasedtojoinRE100asbyaddingourvoicealongsideotherbusinesses,wecanhelpshiftthisimportantmarket.

CoramWilliams,Chieffinancialofficer

FormoreinformationonPearson’scommitment,visithttp://there100.org/pearson.Renewableelectricity:generationOurcommitmentextendstogeneratingelectricityfromrenewablesourcesatoursites.OurfirstrenewableelectricityprojectwentliveinDecember2009.OveritslifetimethenewsolarpanelsonourbuildingatOldTappaninNewJerseyisexpectedtoproduceelectricityequivalentto4,325metrictonnesofC02e.Todate,theOldTappansolarpanelprojectisgenerating9%morethanprojected.During2011weinstalledourfirstwindturbineprojectinOwatonna,MinnesotaandcompletedasecondsolarpanelinstallationprojectatourCranburyDistributionCenterinNewJersey.TheCranburyprojectwasamongthelargestcompanyownedsingleroofprojectsintheworld.2013sawafurther260MWofcapacityinstalledatourbuildingsinAustin,Texas.For2014,weimplementedanew100MWsolarpanelinstallationprojectinSouthAfrica–ourfirstoutsidetheUnitedStates.Asecondsolarpanelinstallationwascompletedin2015.Wehavenowinvestedinexcessof$10millioninrenewableenergygeneration.Ourgenerationcapacityisasfollows:

MW

2010 2011 2012 2013 2014 2015

Solar Old Tappan 210 210 210 210 210 210 Cranbury 2000 2000 2000 2000 2000 Austin 260 260 260 South Africa 100 105 Wind Owatonna 95 95 95 95 95 Total 210 2305 2305 2565 2665 2670

TravellingonbusinessForessentialtravel,we'vebeenencouragingourpeopletoavoidflightswhereverpossibleandwecontinuetolowertheemissionsrelatingtoourcarfleet.

• Wehaveinvestedover$200kinupgradedvideoconferencingfacilitiesinkeybuildingsandintroducednewvirtualmeetingtechnologiesacrossthecompany.

• Globally,weaimtoreplaceourfleetwithhybridandloweremissionvehicleswherepossible.Thenumberofhybridsinourglobalfleetincreasedfrom33in2009toover375in2015andouraimcontinuestobetogrowthenumberofhybridsinthefleet.

6. Offset

Whateveremissionswearenotabletoreduceoravoidareoffsetthrougharangeofforestbasedprojects.Throughoureffortstoreduceenergyuseandbusinesstravel,wereducedourclimatefootprint

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asattheendof2015by10%comparedto2014.Ourfootprintfor2015was146,493metrictonnesofcarbondioxide(CO2e).

Weavoidedafurther88,381metrictonnesthroughourglobalcommitmenttopurchaseelectricityfromrenewablesources.ThisleftPearson58,112metrictonnestooffsetfor2015tomaintainourclimateneutralstatus.WedidthisthroughpartnershipssuchaswiththeChildren'sTropicalForestsUK,theAlgomaHighlandsConservancyinCanada,theWoodlandTrustintheUKandanewpartnershipinChina.

● IntheUK,wesupportWoodlandCarbonofferedbytheWoodlandTrust.WoodlandCarbonwasthe

firstschemetomeettheUK'svoluntarystandardforwoodlandcreationprojectswhichsequestercarbon.Ourfundingcreatedover20hectaresofnewnativewoodlandinHeartwoodForestinStAlbans.

● InNorthAmerica,ouroffsetpartnerisAlgomaHighlandsConservancy.TheAlgomaHighlandsareainOntario,Canadacoversapproaching50,000acresandoursupportistheanchorfundingfortheproject.AwidevarietyofplantsandwildlifespeciesarebeingprotectedincludingrareplantsandanimalsthatareiconictotheCanadianwilderness-moose,bear,timberwolves,otters,woodpeckersandloons.

● TheChildren'sTropicalForestsUKisourprimaryoffsetpartner.For2015,wehaveonceagainagreedtopurchaseandprotectrainforestinColombiaaddingtoourexistingcommitmenttoprotectrainforestinbothColombiaandCostaRicaforpreviousyearsofthePearsonclimateneutralcommitment.

Since2009,ourclimateneutralprogramhasseenusprotectover1,300hectaresofforest.7. Water,WasteandPackaging

WaterOur offices do not use water beyond basic needs - we set targets to reduce usage and it forms part ofourclimatefootprint.Wedeclarewaterusagedatainoursectionondata.Unsoldproduct Wesellavarietyofproducts.Mostarepaper-basedintheformofbooks.Lessthan1%ofoursalesareproductssuchasCDsandDVDs,andsalesofmagazinesaresmall.Wearecommittedtorecyclingasmuchofourunsoldproductaspossible.Sometimesthishappensthroughindustry-wideagreements-aswasthecasefornewspapersintheUK-whilstotherinitiativesarespecifictoPearson.Avoidingunsoldproductisakeybusinessobjective.Improvementsinstockcontrolandsalesforecastingcontributesignificantlytoreducingtheamountofunsoldproductandtolowercost.Responsibledisposalofunsoldproductisasignificantenvironmentalresponsibilityforus.

2009 2010 2011 2012 2013 2014 2015 %age change 2015

vs. 2014 98% 98.5% 98.6% 98.7% 98.9% 98.9% 98.6% -0.3%

Ourtargetistomaintainourreuse/recyclerateforallunsoldbooksandnewsprintinexcessof95%.Thishasbeenachievedsincewesetthetargetin2003andremainsahighpriorityforus.

Packaging

Weuseavarietyofpackagingmaterialsinthedistributionofourproductsworldwide:

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cardboard,plastic,shrink-wrapandfoamfill(avoidfiller).Aparticularobjectiveforushasbeentoreducetheuseofplasticandfoamfillinfavourofpackagingbasedonnaturalmaterials.Ouruseofplastichasreducedbyover85%overthelastsevenyearsandfoamfilluseisover50%lessthan2004.

8. SupplyChainPearsonischanging.Today,digitalservicesanddirectdeliverytogetheraccountforconsiderablyoverhalfourrevenueandthesecontinuetogrowinimportancebringingagrowingtechnology-relatedsupplychainwhichisreshapingourfutureenvironmentalfootprint.Nevertheless,itisourtraditionalpaper-basedproductswhichcontinuetobethesourceofourmostsignificantenvironmentalimpact.Pearsonisapurchaserofpaperforbooks,wehavecontractswithprintersaroundtheworldaswellaswithdistributorsandshipperstobringourproductstomarket.ManagingtheenvironmentalimpactsarisingfromoursupplychainwasfirstidentifiedasapriorityforPearsonoveradecadeagoandhascontinuedeversince.Includingenvironmentalresponsibilityasacontractrequirementdefinesthenatureoftherelationshipthatweseektobuildwithoursuppliers.Inourcontracts,weoutlinethestandardsofperformancethatweexpectfromoursuppliersaswellasthecommitmentswemakeasaresponsiblepurchaser.Thestandardswesetoursuppliersreflectthestandardsthatwesetforourselves.Pearsonintroducedspecificenvironmentalclausesforinclusioninkeycontractsagreedfrom2002onwards. TheseclauseswerereviewedfollowingsupplierfeedbackandtheintroductionbyPearsonofaCode of Business Conduct. ThisyearweintroducedacompanionBusiness Partner Code.Inlinewithourcommitmenttoclimateneutrality,westartedtheprocessofmeasuringandassessingproductcarbonfootprints.OurfirstproductfootprintcoveredtheFinancialTimesandFT.com.

Trucost/FinancialTimes TrucostworkedwithPearsonandtheFinancialTimesonalifecycleanalysisoftheimpactoftheshiftofitssubscriptionmodelfromprinttowardsdigital.ALCAisaquantitativemeasurementtoolusedtoassessresourceuseandpotentialassociatedenvironmentalimpactsatdifferentstagesofthelifecyclestage,fromrawmaterialacquisitionthroughproductionandusetodisposalofaproduct,serviceorprocess.

Total natural capital cost of the FT’s global circulation

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TheresearchconclusionwasthattheriseofdigitalwasinstrumentalindecreasingtheFT’sintensity,orenvironmentalimpactpersubscription.Indeed,ascirculationincreasedby18%betweenQ22011andQ32014,thetotalnaturalcapitalcostdecreasedby25%andthenaturalcapitalintensityby36%.Weplanasecondreviewin2016.PaperPaperwastraditionallythesinglemostmaterialenvironmentalissueforPearsonreflectingouraveragepurchaseofsome300,000metrictonneseachyear–approximately6.5milliontrees.AspartofthewidershifttodigitalatPearson,thematerialityofpaperpurchasehasmassivelyreducedand2015sawasignificantaccelerationofthattrend.Wepurchased146,000metrictonnesofpaperin2015.For2016,weexpectPearsontobedirectlyresponsibleforthepurchaseofaround70,000metrictonnesofpaperreducingfurthertoaround45,000MTin2017.KeyfactorsbehindthisreductionalongsidetheshifttodigitalarethetransferofpaperpurchasingresponsibilityinNorthAmericatoRRDonnelley,thesaleoftheFTGroupandtheestablishmentofPenguinRandomHouse.Nevertheless,paperremainsanimportantenvironmentalissuesreflectingglobalconcernaboutdeforestationandillegallogging–somethingthathasbeenmadeeasiertoidentifybydevelopmentsinfibretestingwhichallowseasyanalysisofbookpapersbytreespecies.Thisfocusisdrivenbythelossofnaturalforestcoverasoneofthebiggestglobalsourcesofgreenhousegasesaccountingfor20%ofglobalemissionsor10timestheemissionsrelatingtoairtravel.Aswellasreducedpaperpurchase,weachievedsomekeymilestonesin2015:- PearsonintheUKgainedChain-of-CustodyaccreditationbytheForestStewardshipCouncil(FSC).

ThismeansthatPearsonproductcancarrytheFSClogo.- CoreandGrowthdoubledthevolumeofpaperpurchasedcarryingthehighestsustainability

rating(FSCorequivalentcertified)toaround45%ofthetotal.Printing

FollowingthedisposalofasmallprintingpressaspartoftheFinancialTimessaleinNovember2015,Pearsonnolongerdirectlyprintsanyofourproducts.Assuch,wedonotconsideremissionstowaterasanissueforourowncompanyreporting.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Q2 2011 (4 April - 3 July)

Q3 2011 (4 July 2011 - 2 October)

Q4 2011 (3 October – 1 January)

Q1 2012 (2 January – April 1)

Q2 2012 (2 April – 1 July)

Q3 2012 (2 July - 1 October)

Q4 2012 (2 October – 1 January)

Q1 2013 (2 January – April 1)

Q2 2013 (2 April - 1 July)

Q3 2013 (2 July - 1 October)

Q4 2013 (2 October – 1 January)

Q1 2014 (2 January – April 1)

Q2 2014 (2 April - 1 July)

Q3 2014 (2 July - 1 October)

500,000

550,000

600,000

650,000

700,000

750,000 $Naturalcapitalcost

Circulation

Global digital Global Print Circulation

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However,emissionstowaterareanissuefacingourthird-partyprinterpartners.Weseeourresponsibilityasbeingtoexertapositiveenvironmentalinfluenceoverthepracticesofourprinters.In2003,wefirstsetupacentralregisterofkeypapersuppliersandoutsourcedprintingrelationships.ThisregisterprovidesPearsonwithapictureoftheenvironmentalperformanceofitsprinters.Theregisterincludesover90%ofourprintersbyvalue.Wesurveyourglobalprinterseverytwoyears.Thesurveycovers: ● Whethertheprinterusesarecognisedsystemforenvironmentalmanagement.● Measurementandreductionpoliciesforwater,ink,solvents,alcohol,energyandwaste.

Theoverallresultsfor2015wereasfollows:

WecontinuetobeconcernedthatthereleaseofVolatileOrganicCompounds(VOCs)whicharepresentininksandsolventsaremanagedeffectivelyandwherepossiblereduced.WeencourageourprinterstointroduceandoperatingcompaniescontinuetomonitorreductiontargetsforVOCsaspartoftheworkabove.Ourproductiondepartmentscontinuetouseourvendorrelationshipmanagementsystemwhichincorporatesbothenvironmentalandlabourstandardsdatatogetherwithcommercialdata.

76%

71%

80% 75%

67%

92%

POSITIVE RESONSE RATE - DO YOU MEASURE

Africa Asia-Pacific Europe Americas Australisia Middle East

39%

59%

59%

44%

78%

67%

POSITIVE RESONSE RATE - DO YOU SET TARGETS

Africa Asia-Pacific Europe Americas Australisia Middle East

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During2015,PearsonpeopleundertookvisitstoexistingandpotentialprintersintheUS,theUK,ChinaandIndia.ThesevisitsprovidedanopportunityforPearsontoreviewperformancestandardsinareasincludingenvironmentalresponsibility,health&safety,labourstandardsandhumanrights.Thefindingsandissuesidentifiedhavebeendiscussedwithourprintersandarebeingmanagedaspartofournormalcommercialrelationships.

Distribution

Ourbooksareproducedaroundtheworld,requiringshipmentfromtheprinterstoourdistributioncentres.Weoutsourceroaddistributionandshipmentofourproductstothirdpartycarriers.Wehaveworkedwithsuppliersonconsolidatingshipmentstomaximisecontainerloadsandmonitorenvironmentalperformanceaspartofthecontractualarrangements.Wehaveaninternalreportingprocessbyfacility.

9. Engagingemployeesandlearners

Climatechangeaffectsusall.Itrequiresleadershipandvisiontoaddressandweallhavearoletoplay.Asmostofourpeopleworkinoffices,testandlearningcentresorindatacentres,Pearsonhasarelativelysmallenvironmentalfootprint.However,wecanhaveamuchmoresignificantimpactthroughinforming,engagingandinspiringthethousandsofpeoplewhoworkforusandwithus,andthemillionswholearnwithuseveryday:- PearsonintheUKgainedChain-of-CustodyaccreditationbytheForestStewardshipCouncil(FSC).

ThismeansthatPearsonproductcancarrytheFSClogo.- PlanetPearson,ourdedicatedgreenspaceisavailabletoouremployeesglobally.PlanetPearson

isawayforPearsonpeopletoshareideas,thoughtsandtocollaboratewherevertheyareintheworld.Thespaceprovidesideasforcarbonreduction,linkstolocalgreengroupsandaccesstoperformancereports.

- Wehavearound20GreenTeamsinplaceinPearsoninbuildingsintheUKandtheUSalongwithcountry-wideteamsinCanada,Australia&SouthAfrica.

10. Greenproducts

Climatechangematterstoourbusinesses.Ouroperatingcompaniescontinuetorespondtotheclimateneutralchallengebydevelopingandinvestinginenvironmentalproductsandservices:- PearsonismarketleaderintheHigherEducationenvironmentalsciencetextbookmarketwitha

40%marketshare.WealsoofferMasteringEnvironmentalScience,acollectionofonlinehomework,tutorial,andassessmentproducts.AcrosstheEnvironmentalSciencelist,around29,000studentsareregisteredfortheproduct.

- WearealsoastrategiclearningpartnerfortheUSGreenBuildingscouncil(USGBC)andareworkingtogethertocreatelearningmaterialsandcourses.

- TheFTnewspaperhasalongtraditionofreportingonenvironmentalandenergyrelatedtopics.ClimatechangeisavailableasathemetoaccessarticlesonFT.comandspecialreportscovertopicsincludingresponsiblebusinessandmanagingclimatechange.Italsohostsanumberofconferencesandawardsonclimatechange,waterandresourcescarcity.

- Overthelast25years,BTECqualificationsintheUKhaveofferedavocationalpathwayintoemploymentorfurtherstudy.Aspartofawidersuiteofqualificationsonsustainabilityskills,theBTECLevel3NationalinEnvironmentalSustainabilitywasofferedforfirstteachingfromSeptember2011.Thisofferslearnersaged16to19interestedinsustainabilityclearprogressionpathwaysintoemploymentorintoHigher,SpecialistandProfessionalcourses.

11. CommitmentsandTargets

Ourmainenvironmentalcommitmentistobeaclimateneutralcompanyforourdirectlycontrolledoperations.Firstachievedin2009,thismeansthatwecommittoreduceoroffsetour

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globalGreenhouseGasemissionsby100%eachyearforourexistingoperationsexcludingacquisitionsmadeduringtheyear.Whereitisnotpossibletoreduceouremissionsbyothermeans,wepurchasecarboncredits.Wehavenowcontinuedthiscommitmentinto2016.Pearsonadoptedanewbaselinefordatain2009.Inlightoftheperformancethisyear,wehaveadoptednewstretchtargets:• ToreduceourabsoluteGreenhouseGasemissionsby50%bytheendof2020using2009as

thebaseyear.[i.e.anadditional20%fortheperiod2016to2020]• Toreduceenergyuseinourbuildingsonanabsolutebasisby50%bytheendof2020using

2013asthebaseyear.[i.e.anadditional25%fortheperiod2016to2020]Inaddition,wearelookingattheseadditionalareasasafocusforPearsonoverthenext18months:Focusareas Suppliers EnsuringdatacentresaresuppliedbycleanenergyCarbonfootprinting Lookbeyonddirectemissionstocaptureimpactsacrossthe

digitalandphysicalvaluechain.Low-carboneconomy Continuetoinvestinenergyefficiencyandrenewableenergyin

ordertoremaincarbonneutral‘Mindprint’ Establishtargets,keyinitiativesand/orpartnershipstoenable

learningandskillsdevelopmentlinkedtospecificsustainabilitychallenges

Circulareconomy Exploringpotentialforclosingthelooponproductsandservicesby2020(zerowastetolandfill)

Target2015 Progress Plansfor2016and

beyondContinuetoextendourgreenteamnetwork

Notachieved.Greenteamnumbersfellto20from30inreflectingreorganisation

ReviewgreenteamstrategyIn2017.

Putinplaceanewglobalcarbonfootprinttool

Achieved.ToolInplace Introducetotalcarbonfootprintreporting.

Maintainourpositionintheindicesofsocialresponsibility

Achieved.PearsonretainedBronzestatusintheDowJonesSustainabilityIndexandwasagainnamedasoneoftheGlobal100mostsustainablecorporationsintheworld.

Maintainourpositionintheindicesofsocialresponsibility

Ourstretchtargetistoreduceenergyuseonanabsolutebasisby25%using2013asabaseline

Achieved.Wereducedenergyuseby24.7%overthelast2years

Toreduceenergyuseinourbuildingsonanabsolutebasisby50%bytheendof2020using2009asthebaseyear

Using2009asthebaseyear,weaimtoreduceourGreenhouseGasEmissionsby25%bytheendof2015

Achieved.WereducedourGHGemissionsby30.3%asattheendof2015

ToreduceourabsoluteGreenhouseGasemissionsby50%bytheendof2020using2009asthebaseyear.

Maintainperemployeeairtravelin2015

Notachieved.Airtravel(passengerkmperemployee)increased15%comparedto2014

Maintainpassengerkmperemployeerateat2015level.

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levelsTarget2015 Progress Plan2016Usegreenmessagingtopromotevideo-conferencingtechnology

Achieved

Maintainourreuse/recyclerateforallunsoldbooksinexcessof95%

Achieved Maintainourreuse/recyclerateforallunsoldbooksinexcessof95%

Using2014asournewbaseyear,ourtargetistoreduceabsolutewateruseacrossthecompanyby10%persquaremetreofoccupiedspacebytheendof2018

Achieved.Wereducedwateruse21%persquaremetrein2015

Using2014asournewbaseyear,ourstretchtargetistoreduceabsolutewateruseacrossthecompanyby30%persquaremetreofoccupiedspacebytheendof2018

CompleteasecondsolarpanelprojectoutsideoftheUnitedStatesbytheendof2016

Ongoing.TwosolarpanelprojectsareunderwayinSouthAfrica

CompleteasecondsolarpanelprojectoutsideoftheUnitedStatesbytheendof2016

Maintainourcommitmenttopurchasegreenelectricityin2015

Achieved.PearsonalsosignedupasamemberofRE100.

Maintainourcommitmenttopurchasegreenelectricityin2016

Target425hybridvehiclesinthePearsonfleetin2015

Achieved.Wehave448hybridcarsinthefleet

Target450hybridvehiclesforthePearsonfleetin2016

Continueourdriveforindependentlyverifiedcertificationforthepapersweuse.

Achieved.PearsonintheUKgainedFSCChainofCustodyaccreditation

Continueourdriveforindependentlyverifiedcertificationforthepapersweuse.

AddafurtherbuildingtobecertifiedagainstLeadershipinEnergyandEnvironmentalDesign(LEED)

Achieved.OurbuildinginRiverStreet,HobokenasassessedasGold.

Developaglobalfacilitiesmanagementhandbook.

12. Dataandtrends

Pearsonhasbeencollectingandreportingonitsenvironmentalimpactsince2002.In2007weadoptedacommitmenttobecomeclimateneutral.Wereporthereonourabsoluteenvironmentalimpactfortheentireglobalbusinessfortheperiod2009to2015. Environmentalreportingmeasures

Units 2009 2010 2011 2012 2013 2014 2015Netinternalareaofreportingoffices m2 1,360,151 1,443,347 1,262,440 1,357,822 1,425,320 1,393,954 1,208,954Full-timeemployees(inscope) FTE 37,164 35,978 41,520 48,500 42,115 40,876 37,265

EnergyConsumption

Measure Units 2009 2010 2011 2012 2013 2014 2015TotalElectricityConsumption(includingfromrenewablesources)

MWh/year 258,114 204,438 198,190 218,410 215,460 186,356 162,916

TotalElectricityConsumption(fromrenewablesourcesonly)

MWh/year 170,229 170,712 166,896 218,410 215,460 186,356 162,916

TotalGasConsumption MWh/year 122,153 78,742 72,884 64,462 66,375 57,144 48,760

TotalFuelOilConsumption MWh/year 7,033 6,533 3,517 1,927 3,755 114 3,500TotalEnergyConsumption MWh/year 385,836 289,714 269,391 284,800 285,590 243,614 215,176

TotalEnergyConsumption/employee

MWh/employee

10.4 8.1 6.5 5.9 6.8 6.0 5.8

16

BusinessTravel

Measure Units 2010 2011 2012 2013 2014 2015Air Passengerkm 219,056,753 242,830,342 255,072,031 235,743,104 193,259,356 207,822,988Rail Passengerkm 3,833,674 3,924,710 4,711,264 3,682,392 937,647 4,374,643Road(distance) MWh/year 9,930,039 7,284,921 3,486,138 6,735,312 6,356,549 1,447,092Road(fueluse) litres 6,336,425 5,815,052 6,120,706 5,849,850 5,312,226 4,894,843Road(derivedenergy) MWh 43,889

WecollectandreportbusinesstravelairdatawherethereisacentralisedagencyintheUS,theUK,Australia,Brazil,Canada,China(includingHongKong),India,Indonesia,Japan,Malaysia,Netherlands,Singapore,SouthAfrica,SouthKorea,Spain,TaiwanandVietnamwhichtogetheraccountforaround%oftotalfull-timeemployees.Threenewcountries–Brazil,IndonesiaandtheNetherlandswereaddedtoourcentralisedagencysupportin2015. GreenhouseGasEmissions

Measure Units 2009 2010 2011 2012 2013 2014 2015Direct(Scope1) TonnesCO2e 44,649 35,739 35,806 31,095 30,170 25,027 22,343Indirect(Scope2) TonnesCO2e 130,395 122,189 114,730 128,542 115,548 104,715 88,381Other(Scope3) TonnesCO2e 4,375 3,523 5,276 2,782 1,381 1,724 1,044Electricitytransmission(Scope3)

TonnesCO2e 10,538 8,204 8,345

BusinessTravel(Scope3) TonnesCO2e 30,887 33,913 28,719 32,336 31,055 22,740 26,255Total TonnesCO2e 210,306 195,364 184,531 194,756 188,692 162,410 146,368TotalGHG/FTE Tonnes

CO2e/FTE 5.66 5.43 4.44 4.02 4.48 3.97 3.93

ThemethodweusetocalculateGHGemissionsistheGHGProtocolCorporateAccountingandReportingStandard(revisededition),togetherwiththelatestemissionfactorsfromrecognisedpublicsourcesincluding,butnotlimitedto,Defra,theInternationalEnergyAgency,theUSEnergyInformationAdministration,theUSEnvironmentalProtectionAgencyandtheIntergovernmentalpanelonClimateChange.InlinewiththeGHGProtocol,wereportonallourScope1and2emissionsandincludetheoptionalelementforemissionsrelatingtobusinessairandrailtravel.

• Scope1:Allfuelusedinourbuildingsandincompanyvehiclesplusrefrigerants• Scope2:Electricityusedinourbuildingsdrawnfromgridswherewedobusiness• Scope3:Emissionsrelatingtoairandrailtravel,electricitytransmission,wasteandwater

17

Paper

Units 2009 2010 2011 2012 2013 2014 2015

Paperused MT 338,993 338,103 319,557 287,452 194,760 152,181 132,551 Wealsoprepareaseparate report onthepaperwepurchaseforuseinourbooks,newspapersandmagazines.Waste

Units 2009 2010 2011 2012 2013 2014 2015TotalWastetoLandfill MT 5,508 3,834 9,097 7,134 3,273 2,005 1,112TotalWastetoLandfill/FTE MT/

FTE148 107 221 147 73 49 30

Water

Units 2010 2011 2012 2013 2014 2015TotalWaterConsumption m3 604,822 528,873 678,256 1,154,106 1,474,077 1,014,268

TotalWaterConsumption/FTE m3/FTE 17 13 14 26 36 27

LegalCompliance

2009 2010 2011 2012 2013 2014 2015

ReportedEnvironmentalProsecutions Nil Nil Nil Nil Nil Nil Nil

13. Usefulcontacts

Ifyouhaveanyquestionsontheenvironmentalreview,pleasecontact:PeterHughesDirector,SustainabilityPearsonplc80Strand,LondonWC2R0RLEmail:peter.hughes@pearson.comTelephone:+442070102249